What Is ‘Assignment Risk’ for an Option Writer?
Assignment risk is the possibility that the option writer will be called upon by the clearing house or counterparty to fulfill their contractual obligation ⎊ to buy or sell the underlying asset at the strike price. For American options, this risk is present at any time up to expiration, making it a continuous and unpredictable risk for the writer.
Glossar
Option Writer
Strategy ⎊ The Option Writer, within cryptocurrency derivatives, assumes a short position in an options contract, obligating them to fulfill the contract's terms if the option is exercised by the holder.
Assignment Process
Process ⎊ The assignment process in options trading refers to the mechanism by which an option writer is randomly selected to fulfill the terms of an exercised contract.
Writer
Obligation ⎊ A writer, within cryptocurrency and derivatives markets, assumes contractual obligations through the sale of options or the shorting of underlying assets, establishing a defined liability contingent upon future price movements.